I use ARCA to route alot of my orders, and find sweeps work well for both entering and exiting positions. It will accept a limit short order at the inside bid on a downtick by adding .01 to the bid (which I like, as Cyber used to always reject the order on a downtick forcing me to click OK, then resubmit the order). However, whether or not you get filled depends on whether the stock upticks before dropping. A fairly effective way around this is to do a sweep (how far depends on your willingness to chase), placing the short order below the inside bid. Again, you won't be filled if the stock drops below your number before upticking, but if it upticks at any point above your number ARCA will attempt to sweep to your limit.

As to REDI I can't help you there. Although I've heard very good things about their speed, the ECN add-on fees are about double that of ARCA, so I stay with the latter if I want an ECN to "work" my order as ARCA has been very fast in my experience. I also use ISLD quite a bit when I am offering out or bidding, as they are cheaper than ARCA.

I received a call from the genleman from ARCA, who was quite insistent that my inquiry about "fades" was incorrect. I asked who the CEO was, and he told me that he wouldn't talk to me.

Well, of course he answered the phone right away, and we both got on our computers and compared entries, bids, offers, etc. via ARCA.

We found out that I was correct (big wow), but more importantly we found that there is a flaw in the system, which in now being corrected.

He would see a bid with (i.e.) "arca hrzg" I would simply see "ARCA" - I would hit the bid, and it would fade (obviously MM's leave non current bids up from time to time and don't have to honor them). We did this for some time, and he is working on it from his end, and I have Redi working on it from our end.

Technology changes, and we need traders to have input, real time, real trading, to make sure all is working well.

And for the millionth time, a MM cannot leave a "non-current" qupte up and not honor it if he is executed against via SS. It is automatic and he doesn't know it happened until after the fact. COnsidering that a MM cannot keep himself out of the SOES queue when at the inside price, I fail to see how any MM could leave a "non-current" ie "real" (not stuck) quote in todays market.

SO please explain what you are referring to in your post and elaborate on this supposed "flaw" in the ARCA system. Thanks.

I realized later that I didn't exactly answer your question! (doh). I got this from Mike at Terranova:

TNO-Mike wrote:

I spoke with our head trader at TNO yesterday on the subject of the Stop Limit Orders on ARCA. Here is what I was told.

The following statement,

âIn other words, my stop is triggered at 50.00 (with a limit at 49.90). It first goes to it's own book, tries to fill my order between 49.90 and 50.00, starting at 50.00 and working down. But only if it can't fill me from it's own book does it even bother to look elsewhere....â is NOT correct.

Once the stop price is triggered, the order is activated as a Limit Order and follows ARCA's SmartBookâ¢ proprietary execution algorithm to find the best price available internally and/or externally. Yes, it will look on the ARCA internal book, but at the same time they scan the Market looking at the NBBO. If a better price exists elsewhere they will outbound preference to another MarketMaker or ECN if they can get a better price than with an internal match.

Baronâs response âIn terms of priority, ARCA does not put its own book above the best price available. It only goes to its own book first when there are multiple participants with the best priceâ¦â is right on.

The important thing to realize here is that the stop price just triggers the order and then from there it follows ARCAâs SmartBookâ¢ algorithm as it would for any limit order and anyone who uses leading limit orders on ARCA would be able to attest to seeing how the price improvement works.

More...

I hope that this is accurate. While it contradicts information that I got on two separate occasions from Order-Entry tech support at Realtick, it makes sense as that's the way it should be!

The question came up about ARCA bids and offers fading when hit. This is happening a lot with our traders, so we investigated it a bit. 4 months ago I was told that they (ARCA) did, in fact have MM's using the ARCA symbol, and therefor the bids and offers could or could not be "real."

After testing, we found the exact same thing, that some users will only see "ARCA" instead of the "ARCA=Hrzg" for example...ecn + MM.

This is being addressed and hopefully will solve the problem of thinking you are hitting a bid on the ECN, when in fact you are hoping a MM will honor theirs.